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January 29, 2009

A pricing solution for the Aggregator Bank

It was reported today that they are having a problem coming up with a pricing model for the Good Bank-Bad bank plan. The dilemma they don't want to pay too much over fair market for the toxic assets but if they pay current market prices the values will be so low that the banks will be insolvent.

I have a simple solution: The Government overpays for a set amount of the assets. Perhaps 200 to 250 billion. These prices become the "market price." The banks then mark the assets to this market price and instantly get their capital ratios restored.

You can't come out and say this is the plan, but if it is the plan the system will work.

Comments

Would like to see Irish Lightning comment on Pelosi's trip to Rome and the "urgent" need to pass a bill that 95% of the legislators have not read. Also, some commentary on inspirational leaders like Chris Dodd and Charles (the middle class doesn't care about pork) Schummer would be appreciated.